Epigenetic mechanisms of gene regulation contribute significantly to normal development and disease pathogenesis. Our long-term goal is to understand the epigenetic mechanisms involved in stem cell fate choice, using the development of hematopoietic stem cells (HSCs) from embryonic stem cells (ESCs) as our model. Since HSCs can be derived in vitro by directed differentiation of embryonic stem cells (ESCs), this procedure holds great promise for cell-based therapy of hematological disorders. However, compared to later stages of HSC differentiation that give rise to various blood cell lineages, epigenetic mechanisms controlling HSC fate specification from ESCs are poorly understood, impeding efforts to develop an efficient protocol for in vitro derivation of HSCs. Our preliminary data suggest that dynamic and combinatorial chromatin modifications are critical to this process. This application seeks to obtain a systems-level understanding of epigenetic regulation of HSC fate by coupling wet-lab experiments with computational modeling. Specifically, we propose to understand the dynamic and gene network aspects of epigenetic regulation. To this end, we hypothesize that dynamic combination of chromatin modifications modulates the expression of key regulators of HSC development. First, we will map genome-wide chromatin modifications at different stages of the ESC-to-HSC transition. Second, using computational tools developed in our lab and chromatin state maps, we will predict and experimentally validate regulatory DNA elements acting at different stages of the developmental process. Finally, we will develop a novel computational tool for integrating chromatin state maps with other genomics data to uncover gene pathways controlling HSC fate choice. We believe that these systems-level studies will reveal the basic principles of epigenetic regulation in development. Further, the specific knowledge of epigenetic regulation in HSCs will fill a critical knowledge gap in HSC fate specification.